The Cupertino, California-based company, though, has since realised that the government won’t tailor rules for one company, and that the PM simply meant ease of doing business. Now, Apple is looking for a Plan B in a country that not only offers volumes but has the potential to be a manufacturing base in the backdrop of US-China trade tensions.

The circumstances are not happy for the phone maker. Already hit by a longer replacement cycle for its phones the world over, Apple has been struggling to sell in India, a market that has a plethora of less expensive, but equally featurerich options, from Chinese players.

Last year, Apple took things into its own hands. Veteran Michel Coulomb got charge of India operations with clear directions to clean up the mess — stop rampant deep discounts that were hurting the brand and leading to price fluctuations, and conjure up a new India strategy.

What followed was high-profile exits, downsizing of distributors, trimming of channels and tighter price control, which led sales to plummet and made 2018 a four-year nadir for the company. Even the new India strategy didn’t quite take off in 2018.

In January, Ashish Chowdhary assumed charge of India operations, but ET’s interaction with key stakeholders still throws up a grim outlook for Apple in 2019.

Industry watchers feel Apple needs a radical change with a two-pronged approach — strengthen music and video services, possibly even through acquisitions, and prepare grounds for making India a manufacturing hub, not just for the domestic market but more importantly, for exports.

“Let me say it in bold words,” says Navkender Singh, associate research director, IDC. “India is not a priority market right now for products sale for Apple, but yes, for manufacturing, it could be a very important one.”

Apple had a 1.2% market share in India at the end of 2018, with sales halving to almost 1.7 million units, according to Counterpoint Technology Market Research.

The iPhone maker made no mention of India while reporting October-December results. But in a response to ET’s queries, which came after repeated reminders over three weeks, Apple said it had a long-term perspective in India, which is already at the heart of its app development programme, through its App Accelerator. “Overall, more than 740,000 jobs in India can be attributed directly to the iOS ecosystem,” it says.

It’s not enough, say insiders and experts, with the brand failing to establish a foothold in the big three areas of device market share, local production and retail presence, with services being close to zero.

A disservice to services

Experts point out that at a time when the worldwide over-the-top (OTT) content market — music and video on demand — has exploded, a handset priced at $1,000 may not find takers in India, but subscription-based content on demand could transcend the price barrier.

“Over the last two to three years, India has evolved into an OTT content delivery-based model, which has seen the entry of a lot of international players as well,” says Prashant Singhal, global head for telecom, media and technology, EY.

Small wonder then, that Apple is among those exploring the acquisition of Zee Entertainment Enterprises (ZEE), along with US major Comcast and Sony Corp among others as reported by ET.

On a global scale, Apple is a latecomer to this party. The company is expected to release its original content in the latter half of 2019 and, according to a recent announcement, iTunes will now be available on Samsung TV sets, a perfect opportunity in a non-iOS market like India.

It could similarly have priced some niche content higher and announced partnerships across different operating systems. Reports suggest Apple may undercut Netflix.

Gaurav Gandhi, country manager, video, Amazon Prime, says it typically takes two years for a conception to come live on screen. “We have invested significantly in local content and we are working on newer shows in seven new languages,” he adds. In a space where Netflix, Voot, Hotstar, HOOQ and Amazon jostle for room, Apple remains years behind.

The company says Apple Music has made inroads into the Indian music streaming space, with a focus on in-country talent. Earlier this month, it launched Apple Maps navigation for India. The phone maker does not, however, seem to be in a hurry to launch Apple Pay in India at a time when all and sundry — including the likes of Google Pay and WhatsApp — have moved into the surging digital payments market.Production, the best option

The big push, though, is production. Apple is the world’s largest electronics manufacturer and second-largest overall manufacturer after Volkswagen AG. Apple makes almost all of its $200-billion worth of products — iPhones, iPads, laptops and wearables — out of China. To put it in perspective, India’s total exports were about $300 billion in 2017-18.

Industry experts believe India has huge potential as the next manufacturing hub for Apple, especially coupled with China-US geopolitical pressures. However, some believe gains will be symbiotic. “Frankly, this seems to be more of a miss for the Indian government, than the other way round,” says Vivan Sharan, partner, Koan Advisory, a public policy advisory which has Netflix and Amazon as its clients.

Contrary to media reports, Sharan says Apple has not put in any application with the government for company-specific concessions since 2017. “After Cook’s visit, Apple had made a proposal to the government, which became redundant once the Phased Manufacturing Plan came into effect. The company has not placed any fresh proposal in the last two years, to the best of our knowledge,” he adds.

Meanwhile, the India Cellular & Electronics Association has sought a 10-year tax holiday, much like in China and Vietnam, along with change in labour and ewaste laws, to attract global giants. Apple, along with Vivo, Oppo, Huawei, Lenovo and Xiaomi, is a member of ICEA.

According to a McKinsey study, the move would “fire up” manufacturing, creating a $230-billion industry by 2025 and generating 4.7 million jobs. “This was a huge opportunity for the government but nothing seems to be moving on this front,” adds Sharan.Retail tails off

Apple began assembling the iPhone SE in 2016 through Wistron in Bengaluru and expanded operations to include the iPhone 6s in 2018. Wistron has applied for the Modified Special Incentive Package Scheme (M-SIPS), notified to attract investments in electronic manufacturing, to invest Rs 5,000 crore over five years and begin manufacturing iPhone 8 too.

However, insiders say it’s still a long way away, given the lack of cutting-edge ecosystem in India.

Plans for a bigger retail presence have also not made much headway, but it might not be Apple’s fault entirely, with the government sitting on its proposal for almost three years.

Three years ago, the clause requiring 30% mandatory local sourcing for foreign players to open single-brand retail stores was relaxed, provided they had state-ofthe-art (the SOTA category) facilities. “Apple, along with other high-tech companies, queued up at the government’s door,” a person in the know of Apple’s application tells ET, not wishing to be identified. “Not a single company has received approval so far.”

Apple is now believed to be planning half a dozen 5,000-sq ft, franchisee-operated Flagship Apple Premium Reseller outlets this year, three each in Delhi-NCR and Mumbai, sources tell ET. It’s a piecemeal effort. As Mahesh Uppal, an independent telecom policy analyst, says, “Right now, policymakers are unlikely to take any bold, or let us say significant, decisions since there is an air of uncertainty, which is typical of an election year.”

Another year may just go down in Apple’s not-so-glorious India story by the time the new government comes in and policy-making resumes in full swing.

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After PSU banks, the government is likely to infuse capital in two chronically ill telecom PSUs BSNL and MTNL, and the Union Cabinet is likely to take a decision on 4G spectrum allocation to them by the third week of the current month after DoT places the note before it for consideration.

At a high-level meeting at the PMO late Tuesday, it was also decided that the two telcos will frame a Voluntary Retirement Scheme (VRS) to reduce their employee strength, which will be followed by a reduction in the retirement age to 58.